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FINM7401 Assignment, Semester 1 2020
Other Assumptions:
• To facilitate your analysis, assume that your bank allows you to lend (and borrow) at a rate of 4%
p.a., compounded daily.
• Assume your friend will sign the contract to buy the apartment by the end of today, once you
figured out which option is better.
Required:
1. Complete excel worksheets with the complete payment schedules for all three financing deals.
The payment schedules should show the amount and timing of all payments. Graph, the Interest
and Principal, amounts out of the payments across time, in each case. (20 Marks)
Your Excel file should include all workings, calculations, schedules of payments, and graphs.
Formulas for the calculations should have cell references wherever possible. If you have computed
a number incorrectly and just typed that number into the spreadsheet (or typed a formula using
numbers when cell references could have been used), you will not receive partial credit for any
portion of you computation that is correct.
2. Complete a Comparison Chart. You should calculate and compare these three options using both
methods: (1) Internal Rate of Return (IRR), and (2) Net Present Value (NPV). Draw a conclusion
on which option you are going to choose using one or two sentences for each method (Only saying
"option 1" is not sufficient, show some reasoning). (10 Marks)
3. Based on your conclusion in Part 2 above, discuss the most viable option for your friend. Be
sure to draw upon the financial knowledge you have learnt so far in this course when making your
decision.
You should discuss which method (IRR or NPV) is more suitable for your evaluation, and why? No
more than 200 words. (5 Marks)
Hint: Think about the advantages and disadvantages of each option and how are they being applied
in this case study.
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FINM7401 Assignment, Semester 1 2020
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FINM7401 Assignment, Semester 1 2020
Required:
1. Prepare two separate spreadsheets for Problem 2. One for the "Basic Cashflow" and another one
for the "Discounted Cash Flow (DCF)". (30 marks)
Hints: The Guest Lecture provides an overview of how you would approach this question. You may
need to use some information from Problem 1. You can follow the templates provided in the Guest
Lecture.
2. Discuss what discount rate you have used in your calculation in part 1, the discussion should be no
more than 150 words. (5 marks)
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FINM7401 Assignment, Semester 1 2020
There are five papers on Corporate Social Responsibility from "Journal of Banking and Finance"
posted on Blackboard. According to the initial alphabet of your surname, you will need to use
the allocated paper to complete this section (Scholarly Skills).
• Surname start with "A" to "G" ⇒ Paper 1
• Surname start with "H" to "L" ⇒ Paper 2
• Surname start with "M" to "S" ⇒ Paper 3
• Surname start with "T" to "X" ⇒ Paper 4
• Surname start with "Y" or "Z" ⇒ Paper 5
2. Structure and Referencing (10 marks): Marks will be allocated for correct grammar and clear and
logical writing. Word limits are strictly enforced. Contents exceed the word limits will not be
marked.
You must format your reference list in line with Harvard Referencing Style which can be accessed here:
https://guides.library.uq.edu.au/referencing/uqharvard. Note that you need to reference
the paper you are summarizing. Your reference should include in-text reference and bibliography. You can
also use other quality resources (journal articles, textbooks) in your summary as long as you reference
them properly. However, use external resources is not compulsory for this task.
Layout
1. Your document should be typed in Times New Roman font, size 12 with 1.15 spaced.
2. You should only have one excel workbook, with spreadsheets for each questions. You are
strongly recommended to follow the template provided on Blackboard.
3. For questions with word limit constraints, you must include the word count at the end of your
answer (e.g. (258 words)). Exceeding the word limit or not specifying the word count will
result in a loss of marks.
4. The overall layout of the assignment should be easy to follow.
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